The weblog of Irfan Yusuf, bush lawyer, humorist and award-winning author, once a small-c conservative but now politically left right out. His often irreverent take on things appears in some newspapers in Australia and New Zealand and online. His comic memoir "Once Were Radicals: My Years As A Teenage Islamo-fascist" was published in May 2009 and won the Iremonger Award for Public Issues Writing.

Thursday, July 07, 2005

Why Employers Should Support Unfair Dismissal

John Howard has proven to be a friend of the Aussie battler. He has kept interest rates down. He has allowed more young Australians to buy new homes by giving them stamp duty concessions and the $7,000 grant.

Mr Howard has helped keep the economy strong and has committed himself to reducing red tape for small business. He has also promised to free up the industrial relations system, replacing the layers of state legislation and awards with a single federal system.

Mr Howard’s proposal reads really well on paper. No unfair dismissals for businesses employing less than 100 staff. A national workers compensation system. Simplified awards. The system sounds great. But there’s one hitch.

The system just won’t work.

Communism was really good on paper. It still looks superb. But we all know that communism just doesn’t work. And Mr Howard’s industrial reforms look like going in the same direction.

Let’s look at unfair dismissal. We have all read the horror stories of employers forking out tens of thousands of dollars on legal fees just to sack someone caught stealing. But how many cases ever reach as far as a hearing?

In NSW, the unfair dismissal system operates using simple forms. You don’t need a lawyer to make a claim or to defend one. The forms are easy to fill out and readily available at the website of the Industrial Relations Commission.

The procedures and law at both state and federal level are basically the same. A commissioner gets involved at first instance and tries to conciliate in an informal manner. In practice, that commissioner tells it as it is to both parties.

The most a worker can get is 6 months wages. Workers represented by lawyers generally pay legal fees from their award. Rarely does one party pay the other party’s legal costs. Most claims settle at conciliation.

Employees who believe they have been unfairly sacked have other remedies also. They can bring a myriad of discrimination claims, unfair contract claims, workers compensation claims and other claims. They can make life difficult for their former bosses by dobbing them in to any one of numerous regulatory bodies, including the local council, licensing bodies, ASIC and other government agencies.

Removing unfair dismissal opens the floodgates to employees making more difficult and expensive claims. There are plenty of personal injury lawyers twiddling their thumbs looking for things to do. And these lawyers will often happily act for employees on a speculative “no win no pay” basis in major claims.

If Mr Howard removes unfair dismissal, what will he do about all the other potential remedies? What will he do when small business starts complaining about rising fees in discrimination claims, unfair contract claims and other similar claims?

Defending unfair dismissal claims costs money for employers. But the alternatives are even more expensive. And many of these alternatives involve the employer potentially being liable for legal costs of their former employees as well as compensation.

Business is all about watching the bottom line. Removing a cheap and efficient remedy like unfair dismissal will hurt the bottom line of small business even more than keeping the remedy. If small businesses knew how much it would cost to defend the alternatives, they would be clamouring for unfair dismissal laws to stay in place.